New bubbles forming in all markets, Chinese commodity buying could have peaked. Watch global bond markets, may weaken on deficits and corp defaults.

The stock market is now overbought and as mentioned it is now trading in a range as discussed in Dow rallies over 9000 closes at 9069 - July 2009. This could go on till the end of the year or correct in at some point within the northern hemisphere winter. Regardless goverment fiscal policy and central bank monetary policy both now are encouraging speculators back into the housing and stock market which have ensured that new bubbles are forming, and quite rapidly.

China in that sense is the biggest concern, it's stimulus is purely for domestic demand and to maintain a degree of domestic output in production. The US consumer is out for the count, so China cannot rely on exports for income. China is leading the world with a wave of massive fiscal deficits that it may or may not be able to maintain short and long term, but it is prepared to take that risk. In the meantime it now has massive amounts of leverage pumped back into it's ecomomy, bubbles have occurred in stocks, housing, construction and the stock piling or raw materials. Which China can use to play the commodity markets with, more so copper and even to a degree iron ore. To force prices down. It cares about it's own situation not the rest of the world. China can depress it's currency, forces other countries to lower their currencies and arrest corporate staff (re Rio Tinto) all to maintain some kind of order in it's social/economic demographics. China can also shut down it's private sector and run solely on goverment stimulus as a way of re-balancing their ecomomy via goverment fiscal policy, perilous and disturbing but a reality.

This of course means that the commodity buying cycle from China could have peaked out. So the commodity markets may be in for a correction. Oil will be worth watching as output slows and demand increases it will be interesting to see how much oil will decline in price. The Chinese have stockpiled oil over the years, but to run that massive ecomomy oil is still going to be bought. The oil market may maintain as the only play as far as commodities go if a future sell is on the cards. The IMF selling gold because it needs money may offset the gold price, but gold is a crisis buy as goverments throw money into their own economies at some point the bond markets, both corporate (on the back of a commercial property meltdown) and goverment bonds could weaken and collapse in price, I would not rule out a large sell off as countries try and recapitalize, especially export depended countries i.e China.